Q2 0.67 Q1 0.76 2007 Q4 0.76 Q3 0.70 Q2 0.80 Q1 0.79 2006 Q4 0.79 Q3 0.69 Q2 0.72 Q1 0.83 NA = not available NM = not meaningful 1 Compustat fiscal year convention is used for all fundamental data items. Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years 2006 2007 2008 30 35 40 45 50 55 60 TTTTTAAAAARRRRRGGGGGEEEEETTTTT P PPPPRRRRRIIIIICCCCCEEEEE $ $$$$3333399999....0.000022222 Rating History BUY 0 1 2 Volume in Millions COMPUSTAT for Price and Volume, TheStreet.com Ratings, Inc. for Rating History RECOMMENDATION We rate ALLIANCE RESOURCE PTNRS -LP (ARLP) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. HIGHLIGHTS ARLP's revenue growth trails the industry average of 31.1%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. Net operating cash flow has increased to $84.37 million or 16.59% when compared to the same quarter last year. Despite an increase in cash flow, ALLIANCE RESOURCE PTNRS -LP's average is still marginally south of the industry average growth rate of 22.41%. Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ALLIANCE RESOURCE PTNRS -LP's return on equity significantly exceeds that of both the industry average and the S&P 500. ALLIANCE RESOURCE PTNRS -LP's earnings per share declined by 16.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ALLIANCE RESOURCE PTNRS -LP increased its bottom line by earning $3.05 versus $3.03 in the prior year. For the next year, the market is expecting a contraction of 6.5% in earnings ($2.85 versus $3.05). Currently the debt-to-equity ratio of 1.53 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.63, which shows the ability to cover short-term cash needs.